Upstart Announces Fourth Quarter and Full Year 2021 Results
“With triple-digit growth and record profits, Q4 was an exceptional finish to a breakout year for Upstart. 2021 will be remembered as the year AI lending came to the forefront, kicking off the most impactful transformation of credit in decades,” said
Fourth Quarter 2021 Financial Highlights
- Revenue. Total revenue was
$305 million , an increase of 252% from the fourth quarter of 2020. Total fee revenue was$287 million , an increase of 240% year-over-year.
- Transaction Volume and Conversion Rate. Bank partners originated 495,205 loans, totaling
$4.1 billion , across our platform in the fourth quarter, up 301% from the same quarter of the prior year. Conversion on rate requests was 24% in the fourth quarter of 2021, up from 17% in the same quarter of the prior year.
- Income from Operations. Income from operations was
$60.4 million , up from$10.4 million the prior year.
- Net Income and EPS. GAAP net income was
$58.9 million , up from$1.0 million in the fourth quarter of 2020. Adjusted net income was$87.0 million , up from$5.4 million in the same quarter of the prior year. Accordingly, GAAP diluted earnings per share was$0.61 , and diluted adjusted earnings per share was$0.89 based on the weighted-average common shares outstanding during the period.
- Contribution Profit. Contribution profit was
$149.5 million , up 261% from in the fourth quarter of 2020, with a contribution margin of 52% compared to a 49% contribution margin in the same quarter of the prior year.
- Adjusted EBITDA. Adjusted EBITDA was
$91.0 million , up from$15.5 million in the same quarter of the prior year. The fourth quarter 2021 adjusted EBITDA margin was 30% of total revenue, up from 18% in the fourth quarter of 2020.
Full Year 2021 Financial Highlights
- Revenue. Total revenue was
$849 million , an increase of 264% from 2020. Total fee revenue was$801 million , an increase of 251% year-over-year.
- Transaction Volume and Conversion Rate. Bank partners originated 1.3 million loans, totaling
$11.8 billion , across our platform in 2021, up 338% from the prior year. Conversion on rate requests was 24% 2021, up from 15% in the prior year.
- Income from Operations. Income from operations was
$141 million , up from$11.8 million the prior year.
- Net Income and EPS. GAAP net income was
$135 million , up from$6.0 million in 2020. Adjusted net income was$224 million , up from$17.5 million in the prior year. Accordingly, GAAP diluted earnings per share was$1.43 , and diluted adjusted earnings per share was$2.37 based on the weighted-average common shares outstanding during the period.
- Contribution Profit. Contribution profit was
$398 million , up 279% from 2020, with a contribution margin of 50% compared to a 46% contribution margin in the prior year.
- Adjusted EBITDA. Adjusted EBITDA was
$232 million , up from$31.5 million in the prior year. Full year 2021 adjusted EBITDA margin was 27% of total revenue, up from 13% in 2020.
Financial Outlook
For the first quarter of 2022, Upstart expects:
- Revenue of
$295 to$305 million - Contribution Margin of approximately 46%
- Net Income of
$18 to$22 million - Adjusted Net Income of
$50 to$52 million - Adjusted EBITDA of
$56 to$58 million - Basic Weighted-Average Share Count of approximately 84.3 million shares
- Diluted Weighted-Average Share Count of approximately 95.9 million shares
For the full year 2022, Upstart expects:
- Revenue of approximately
$1.4 billion - Contribution Margin of approximately 45%
- Adjusted EBITDA of approximately 17%
- Auto Transaction Volume of approximately
$1.5 billion
Upstart has not reconciled the forward-looking non-GAAP measures above to comparable forward-looking GAAP measures because of the potential variability and uncertainty of incurring these costs and expenses in the future. Accordingly, a reconciliation is not available without unreasonable effort.
Key Operating Metrics and Non-GAAP Financial Measures
For a description of our key operating measures, please see the section titled “Key Operating Metrics” below.
Reconciliations of non-GAAP financial measures to the most directly comparable financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section titled "About Non-GAAP Financial Measures” below.
Conference Call and Webcast
- Live Conference Call and Webcast at
1:30 p.m. PT onFebruary 15, 2022 . To access the call in theU.S. andCanada , dial, +1 877-614-0009, conference code 3385320, and outside of theU.S. andCanada , dial +1 313-209-7315, conference code 3385320. A webcast is available at ir.upstart.com. - Event Replay. To replay the call in the
U.S. andCanada , dial +1 888-203-1112 (code 3385320), and outside of theU.S. andCanada , dial +1 719-457-0820 (code 3385320). A call replay is available throughFebruary 22, 2022 . The webcast will be archived for one year at ir.upstart.com.
About Upstart
Upstart is a leading AI lending platform partnering with banks and credit unions to expand access to affordable credit. By leveraging Upstart’s AI platform, Upstart-powered banks and credit unions can have higher approval rates and lower loss rates for every race, ethnicity, age, and gender, while simultaneously delivering the exceptional digital-first lending experience their customers demand. More than two-thirds of Upstart loans are approved instantly and are fully automated. Upstart was founded by ex-Googlers in 2012 and is based in
Forward-Looking Statements
This press release contains forward-looking statements, including but not limited to, statements regarding our outlook for the first quarter and full year of 2022 and regarding auto loan originations providing growth opportunities. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate", "estimate", "expect", "project", "plan", "intend", “target”, “aim”, "believe", "may", "will", "should", “becoming”, “could”, "can have", "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. Forward-looking statements give our current expectations and projections relating to our financial condition; plans; objectives; growth opportunities; assumptions; risks; future performance; business; our share repurchase program and any other investments; and results of operations, including revenue, contribution margin, net income (loss), non-GAAP adjusted net income, adjusted EBITDA, adjusted EBITDA margin, basic weighted-average share count and diluted weighted-average share count. Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The forward-looking statements included in this press release and on the related teleconference call relate only to events as of the date hereof. Upstart undertakes no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected. More information about factors that could affect our results of operations and risks and uncertainties are provided in our public filings with the
Key Operating Metrics
We review a number of operating metrics, including transaction volume, dollars; transaction volume, number of loans; and conversion rate; to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.
We define “transaction volume, dollars” as the total principal of loans transacted on our platform between a borrower and the originating bank during the period presented. We define “transaction volume, number of loans” as the number of loans facilitated on our platform between a borrower and the originating bank during the period presented. We believe these metrics are good proxies for our overall scale and reach as a platform.
We define “conversion rate” as the number of loans transacted in a period divided by the number of rate inquiries received that we estimate to be legitimate, which we record when a borrower requests a loan offer on our platform. We track this metric to understand the impact of improvements to the efficiency of our borrower funnel on our overall growth. Until
About Non-GAAP Financial Measures
In addition to our results determined in accordance with generally accepted accounting principles in
We believe non-GAAP information is useful in evaluating the operating results, ongoing operations, and for internal planning and forecasting purposes. We also believe that non-GAAP financial measures provide consistency and comparability with past financial performance and assist investors with comparing Upstart to other companies, some of which use similar non-GAAP financial measures to supplement their GAAP results. Non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP and may be different from similarly titled non-GAAP financial measures used by other companies.
Key limitations of our non-GAAP financial measures include:
- Contribution Profit is not a GAAP financial measure of, nor does it imply, profitability. Even if our revenue exceeds variable expenses over time, we may not be able to achieve or maintain profitability, and the relationship of revenue to variable expenses is not necessarily indicative of future performance;
- Contribution Profit does not reflect all of our variable expenses and involves some judgment and discretion around what costs vary directly with loan volume. Other companies that present contribution profit calculate it differently and, therefore, similarly titled measures presented by other companies may not be directly comparable to ours;
- Although depreciation expense is a non-cash charge, the assets being depreciated may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
- Adjusted EBITDA excludes stock-based compensation expense and certain employer payroll taxes on employee stock transactions. Stock-based compensation expense has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy. The amount of employer payroll tax-related expense on employee stock transactions is dependent on our stock price and other factors that are beyond our control and which not correlate to the operation of the business;
- Adjusted EBITDA does not reflect: (1) changes in, or cash requirements for, our working capital needs; (2) interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces cash available to us; or (3) tax payments that may represent a reduction in cash available to us;
- The expenses and other items that we exclude in our calculation of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from Adjusted EBITDA when they report their operating results.
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included below.
|
CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Data) (Unaudited) |
||||
|
|
|
|||
|
2020 |
2021 |
|||
| Assets | ||||
| Cash |
|
|
|
|
| Restricted cash |
60,514 |
|
204,633 |
|
| Loans (at fair value) |
78,460 |
|
252,477 |
|
| Notes receivable and residual certificates (at fair value) |
19,074 |
|
8,288 |
|
| Property, equipment, and software, net |
10,032 |
|
24,259 |
|
| Operating lease right of use assets |
18,310 |
|
96,118 |
|
| Non-marketable equity security |
- |
|
40,000 |
|
|
- |
|
67,062 |
||
| Intangible assets, net |
- |
|
19,906 |
|
| Other assets (includes |
40,046 |
|
121,104 |
|
| Total assets |
|
|
|
|
| Liabilities and Stockholders’ Equity | ||||
| Liabilities: | ||||
| Accounts payable |
|
|
|
|
| Payable to investors |
45,501 |
|
107,598 |
|
| Borrowings |
62,626 |
|
695,432 |
|
| Accrued expenses and other liabilities (includes |
35,669 |
|
103,418 |
|
| Operating lease liabilities |
19,432 |
|
100,366 |
|
| Total liabilities |
177,003 |
|
1,013,377 |
|
| Stockholders’ equity: | ||||
| Common stock, |
7 |
|
8 |
|
| Additional paid-in capital |
369,467 |
|
740,849 |
|
| Retained earnings (accumulated deficit) |
(69,222 |
) |
66,221 |
|
| Total stockholders’ equity |
300,252 |
|
807,078 |
|
| Total liabilities and stockholders’ equity |
|
|
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE INCOME (In Thousands, Except Share and Per Share Data) (Unaudited) |
|||||||||||
|
Three Months Ended |
|
Year Ended |
|||||||||
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
| Revenue: | |||||||||||
| Revenue from fees, net |
$ |
84,421 |
$ |
287,387 |
$ |
228,600 |
$ |
801,275 |
|||
| Interest income and fair value adjustments, net (a) |
|
2,289 |
|
17,461 |
|
4,816 |
|
47,314 |
|||
| Total revenue |
|
86,710 |
|
304,848 |
|
233,416 |
|
848,589 |
|||
| Operating expenses: | |||||||||||
| Sales and marketing |
|
34,546 |
|
114,815 |
|
99,659 |
|
333,453 |
|||
| Customer operations |
|
12,789 |
|
41,049 |
|
37,581 |
|
117,579 |
|||
| Engineering and product development |
|
14,151 |
|
46,495 |
|
38,802 |
|
133,999 |
|||
| General, administrative, and other |
|
14,831 |
|
42,075 |
|
45,609 |
|
122,677 |
|||
| Total operating expenses |
|
76,317 |
|
244,434 |
|
221,651 |
|
707,708 |
|||
| Income from operations |
|
10,393 |
|
60,414 |
|
11,765 |
|
140,881 |
|||
| Other income (expense) |
|
52 |
|
22 |
|
5,549 |
|
(5,174) |
|||
| Expense on warrants and convertible notes, net |
|
(9,047) |
|
(1,169) |
|
(11,364) |
|
(1,976) |
|||
| Net income before income taxes |
|
1,398 |
|
59,267 |
|
5,950 |
|
133,731 |
|||
| Provision (benefit) for income taxes |
|
371 |
|
323 |
|
371 |
|
(1,712) |
|||
| Net income before attribution to noncontrolling interests |
|
1,027 |
|
58,944 |
|
5,579 |
|
135,443 |
|||
| Net loss attributable to noncontrolling interests |
|
- |
|
- |
|
(404) |
|
- |
|||
| Net income attributable to |
$ |
1,027 |
$ |
58,944 |
$ |
5,983 |
$ |
135,443 |
|||
| Net income per share attributable to |
$ |
- |
$ |
0.71 |
$ |
- |
$ |
1.73 |
|||
| Net income per share attributable to |
$ |
- |
$ |
0.61 |
$ |
- |
$ |
1.43 |
|||
| Weighted-average number of shares outstanding used in computing net income per share attributable to |
|
26,001,856 |
|
82,616,735 |
|
17,513,670 |
|
78,106,359 |
|||
| Weighted-average number of shares outstanding used in computing net income per share attributable to |
|
26,001,856 |
|
98,804,259 |
|
17,513,670 |
|
94,772,641 |
|||
| ____________ | |||||||||||
| (a) Includes |
|||||||||||
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) |
|||||
|
Year Ended |
|||||
|
2020 |
|
2021 |
|||
| Cash flows from operating activities | |||||
| Net income before attribution to noncontrolling interests |
|
|
|
|
|
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||
| Change in fair value of financial instruments (a) |
29,049 |
|
(228 |
) |
|
| Stock-based compensation |
11,513 |
|
73,186 |
|
|
| Gain on loan servicing arrangements and sale of noncontrolling interests, net |
(1,530 |
) |
(6,916 |
) |
|
| Depreciation and amortization |
2,278 |
|
7,541 |
|
|
| Incentive share expense |
787 |
|
- |
|
|
| Non-cash interest expense |
73 |
|
1,983 |
|
|
| Net changes in operating assets and liabilities: | |||||
| Purchase of loans for immediate resale |
(2,540,948 |
) |
(8,713,476 |
) |
|
| Proceeds from immediate resale of loans |
2,540,948 |
|
8,713,476 |
|
|
| Purchase of loans held-for-sale |
(116,127 |
) |
(219,128 |
) |
|
| Principal payments received for loans held-for-sale |
18,218 |
|
8,659 |
|
|
| Net proceeds from sale of loans held-for-sale |
47,604 |
|
112,569 |
|
|
| Other assets |
(13,186 |
) |
(62,042 |
) |
|
| Operating lease liability and right-of-use asset |
251 |
|
3,126 |
|
|
| Accounts payable |
7,033 |
|
(7,513 |
) |
|
| Payable to investors |
19,446 |
|
62,097 |
|
|
| Accrued expenses and other liabilities |
4,709 |
|
59,576 |
|
|
| Net cash provided by operating activities |
15,697 |
|
168,353 |
|
|
| Cash flows from investing activities | |||||
| Principal payments received for loans held by consolidated securitizations |
24,018 |
|
- |
|
|
| Net proceeds from sale of loans held-for-investment |
97,340 |
|
51,403 |
|
|
| Principal payments received for loans held-for-investment |
15,758 |
|
24,532 |
|
|
| Principal payments received for notes receivable and repayments of residual certificates |
14,665 |
|
11,458 |
|
|
| Purchase of loans held-for-investment |
(9,655 |
) |
(159,398 |
) |
|
| Purchase of non-marketable equity security |
- |
|
(40,000 |
) |
|
| Purchase of notes receivable and residual certificates |
(4 |
) |
- |
|
|
| Purchase of property and equipment |
(1,355 |
) |
(8,427 |
) |
|
| Capitalized software costs |
(4,250 |
) |
(6,688 |
) |
|
| Acquisition, net of cash acquired |
- |
|
(16,757 |
) |
|
| Net cash (used in) provided by investing activities |
136,517 |
|
(143,877 |
) |
|
| Cash flows from financing activities | |||||
| Proceeds from initial public offering, net of underwriting discounts and offering costs |
159,488 |
|
- |
|
|
| Proceeds from secondary offering, net of underwriting discounts, commissions, and offering costs |
- |
|
263,931 |
|
|
| Proceeds from borrowings |
92,057 |
|
718,422 |
|
|
| Payment of debt issuance costs |
- |
|
(15,727 |
) |
|
| Purchase of capped calls |
- |
|
(58,523 |
) |
|
| Taxes paid related to net share settlement of equity awards |
- |
|
(236 |
) |
|
| Payments made on securitization notes and certificates (b) |
(26,126 |
) |
- |
|
|
| Repayments of borrowings |
(148,113 |
) |
(71,316 |
) |
|
| Distributions made to noncontrolling interests |
(622 |
) |
- |
|
|
| Proceeds from exercise of convertible preferred stock warrants |
6 |
|
- |
|
|
| Proceeds from issuance of common stock under employee stock purchase plan |
- |
|
4,145 |
|
|
| Proceeds from exercise of stock options |
2,362 |
|
14,736 |
|
|
| Net cash provided by financing activities |
79,052 |
|
855,432 |
|
|
| Net increase in cash and restricted cash |
231,266 |
|
879,908 |
|
|
| Cash and restricted cash at beginning of year |
80,067 |
|
311,333 |
|
|
| Cash and restricted cash at end of year |
|
|
|
|
|
| ____________ | |||||
| (a) Includes |
|||||
| (b) Includes |
|||||
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In Thousands, Except Share and Per Share Data) (Unaudited) |
|||||||||||
|
Three Months Ended |
|
Year Ended |
|||||||||
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|||||
| Revenue from fees, net |
|
|
|
|
|
|
|
|
|||
| Income from operations |
10,393 |
|
60,414 |
|
11,765 |
|
140,881 |
|
|||
| Operating Margin |
12 |
% |
21 |
% |
5 |
% |
18 |
% |
|||
| Sales and marketing, net of borrower acquisition costs(1) |
|
|
|
|
|
|
|
|
|||
| Customer operations, net of borrower verification and servicing costs(2) |
1,996 |
|
6,596 |
|
5,769 |
|
21,797 |
|
|||
| Engineering and product development |
14,151 |
|
46,495 |
|
38,802 |
|
133,999 |
|
|||
| General, administrative, and other |
14,831 |
|
42,075 |
|
45,609 |
|
122,677 |
|
|||
| Interest income and fair value adjustments, net |
(2,289 |
) |
(17,461 |
) |
(4,816 |
) |
(47,314 |
) |
|||
| Contribution Profit |
|
|
|
|
|
|
|
|
|||
| Contribution Margin |
49 |
% |
52 |
% |
46 |
% |
50 |
% |
|||
|
(1) |
Borrower acquisition costs were |
|||||||
|
(2) |
Borrower verification and servicing costs were |
|||||||
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In Thousands, Except Share and Per Share Data) (Unaudited) |
|||||||||||
|
Three Months Ended |
|
Year Ended |
|||||||||
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|||||
| Total revenue |
|
|
|
|
|
|
|
|
|||
| Net income attributable to |
1,027 |
|
58,944 |
|
5,983 |
|
135,443 |
|
|||
| Net Income Margin |
1 |
% |
19 |
% |
3 |
% |
16 |
% |
|||
| Adjusted to exclude the following: | |||||||||||
| Stock-based compensation and certain payroll tax expenses(1) |
|
|
|
|
|
|
|
|
|||
| Depreciation and amortization |
647 |
|
2,557 |
|
2,278 |
|
7,541 |
|
|||
| Expense on warrants and convertible notes, net(2) |
9,047 |
|
1,169 |
|
11,364 |
|
1,976 |
|
|||
| Provision for income taxes |
371 |
|
323 |
|
371 |
|
(1,712 |
) |
|||
| Acquisition-related costs |
- |
|
- |
|
- |
|
1,237 |
|
|||
| Adjusted EBITDA |
|
|
|
|
|
|
|
|
|||
| Adjusted EBITDA Margin |
18 |
% |
30 |
% |
13 |
% |
27 |
% |
|||
|
(1) |
In 2021, we began excluding the amount of employer payroll tax-related expense on employee stock transactions, as the amount is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of our business. | |||||||
|
(2) |
Consists of fair value adjustments to our warrant liability for the years ended |
|||||||
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In Thousands, Except Share and Per Share Data) (Unaudited) |
|||||||||||
|
Three Months Ended |
|
Year Ended |
|||||||||
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
| Net income attributable to |
$ |
1,027 |
$ |
58,944 |
$ |
5,983 |
$ |
135,443 |
|||
| Adjusted to exclude the following: | |||||||||||
| Stock-based compensation and certain payroll tax expenses(1) |
|
4,411 |
|
28,013 |
|
11,513 |
|
87,461 |
|||
| Acquisition-related costs |
|
- |
|
- |
|
- |
|
1,237 |
|||
| Adjusted Net Income |
$ |
5,438 |
$ |
86,957 |
$ |
17,496 |
$ |
224,141 |
|||
| Net income per share: | |||||||||||
| Basic |
$ |
- |
$ |
0.71 |
$ |
- |
$ |
1.73 |
|||
| Diluted |
$ |
- |
$ |
0.61 |
$ |
- |
$ |
1.43 |
|||
| Adjusted Net Income per Share: | |||||||||||
| Basic |
$ |
0.21 |
$ |
1.05 |
$ |
1.00 |
$ |
2.87 |
|||
| Diluted |
$ |
0.07 |
$ |
0.89 |
$ |
0.23 |
$ |
2.37 |
|||
| Weighted-average common shares outstanding: | |||||||||||
| Basic |
|
26,001,856 |
|
82,616,735 |
|
17,513,670 |
|
78,106,359 |
|||
| Diluted |
|
80,275,422 |
|
98,804,259 |
|
76,098,275 |
|
94,772,641 |
|||
|
(1) |
In 2021, we began excluding the amount of employer payroll tax-related expense on employee stock transactions, as the amount is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of our business. | |||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20220215006011/en/
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